Welcome back to The Breakdown with me, NLW.

It's a daily podcast on Macro, Bitcoin, and the Big Picture Power Shifts remaking our world.

What's going on, guys? It is Wednesday, September 4th, and today we are talking about the latest

SEC settlement. Before we get into that, however, if you are enjoying the breakdown, please go subscribe

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come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash

breakdown pod. Well, friends, the SEC continues to go

scorched earth on the industry, this time bringing the hammer down on Galois Capital. The fund has

agreed to a $225,000 settlement, which will be distributed to harmed investors. The allegations are

primarily that Galois Capital failed to hold crypto assets with a qualified custodian.

Corey Schuster, co-chief of the SEC's

asset management unit, said, by failing to comply with custody rule provisions, Galois Capital

exposed investors to risks that fund assets, including crypto assets could be lost, misused,

or misappropriated. Additional allegations claim that Galois diverged from their redemption policy,

allowing some investors to exit the fund on short notice.

Gaoaw agreed to settle without admitting to the allegations. For context, Galwa Capital was a mid-sized private quant fund based in Miami. They operated as an RIA or registered investment advisor. At their

peak, they boasted 200 million in assets under management. Their founder, Kevin Zhao, was best

known for being outspoken ahead of the Luna collapse and made a significant return for investors betting on its downfall. In early

2023, the fund was shut down and returned money to investors. Reporting, and the firm themselves,

revealed that they had half their assets trapped in the FTX bankruptcy, some $40 million

worth. The SEC identified FTX specifically as one of the unqualified custodians that

form the basis of the allegations. Zhu discussed the, quote, exhaustive and costly investigations

...